MillimanPrepared by:
John Hankerson
1301 Fifth Avenue, Suite 3800
Seattle, Washington 98101-2605
206/504.5545
September 24, 2008
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City of Rosemead
Classification and Total Compensation Study
Section I Transmittal Letter ...........................................................................3
Section 11 Executive Summary .......................................................................4
Section III Firm Qualifications & Experience ...................................................9
Section IV Personnel .......................................................................................12
Section V Project Approach/Solution .............................................................14
Section VI Team Qualifications .......................................................................28
Section VII Project Timing & Fees ...................................................................30
Section VIII Proposed Contract Language ........................................................32
Appendix
Consultant Biographies
MILLIMAN 2
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September 24, 2008
Ms. Gloria Molleda
City Clerk
City of Rosemead
8838 E. Valley Boulevard
Rosemead, California 91770
Dear Ms. Molleda:
Milliman is pleased to submit this proposal to conduct a Classification and Total
Compensation Study for the City of Rosemead. We believe Milliman's experience and
reputation for high quality compensation consulting services are second to none. Our
experience administering salary surveys and designing compensation systems as well as
our experience-based knowledge of the public sector and its unique challenges make us
uniquely qualified to assist the City with this effort. In addition our experience bringing the
best practices of our private sector clients into the conversation with our public sector clients
has proven to be invaluable.
Our consultants are committed to excellence and to providing the highest quality services to
our clients.
We have tried to be responsive to your RFP and would be happy to discuss our approach or
qualifications with you. We have included a full scope of activities and recognize that you
may want to limit or expand them to better fit your needs. If you believe that the Milliman
team is qualified for this project, we would be happy to discuss modifying the activities to
meet your budget and focus.
This proposal is contingent on the execution of a written agreement by the parties. If we are
the selected vendor, we are happy to negotiate a mutually acceptable definitive agreement
that incorporates your required contract provisions and Milliman's required contract
provisions. Included are Milliman's standard terms and conditions for your review.
If we can provide any additional information to help in evaluating the Milliman team, please
don't hesitate to contact me at 206/504.5545.
Sincerely,
John Hankerson
Principal & Practice Leader, Strategic Rewards
MILLIMAN
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The City of Rosemead is soliciting proposals from qualified consultants with significant experience in
job analysis, salary survey management, compensation and classification systems and
communication. The focus of this effort will be:
Classification
Review of all pertinent background information including City job evaluation and compensation
systems
Develop and review job content information provided by employees
Interview employees as needed to solicit additional job information
e Conduct conferences with department management to review department structure and identify
issues
Recommend job/class title changes and consolidate where possible
Recommend an approach to job measurement that fits the City's overall program
Develop appropriate series of jobs/classifications
Identify benchmarks and the relationships between benchmarks and other jobs in a series and
relative to the overall structure
Update job descriptions and evaluations to support recommended changes
Provide all necessary guidelines for the maintenance of the classification system including job
analysis, job descriptions, structure, managing job audits, etc.
Communication
Develop a communication plan for the project
Conduct orientation and briefing sessions
Maintain weekly contact with staff on study matters
Review findings with staff
Compensation
o Identify labor markets and develop target data sources
e Recommend benchmarks
Review current compensation system
Conduct total compensation survey
Review internal and external equity
Develop salary recommendations for each job
Recommend placement of jobs into salary ranges
Develop a maintenance program to keep the system current and responsive
Prepare report of findings and recommendations
Develop implementation strategy for recommended changes
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Benefits (option as part of total compensation survey)
e Collect specific benefit plan data from the City's peer group
o Compare the relative value of the City's benefits to its peers
e Combine the benefit values with cash compensation to evaluate the competitiveness of the "total
compensation" package offered by the City
Review the competitiveness of the City's total benefit package
4 Recommend changes to the City's benefit package to align it more closely to the City's total
compensation philosophy and the desired "mix" of pay elements relative to each other
If the City intends to look at total compensation, it is Milliman's recommendation that the two portions
of this study, compensation and benefits, be tied closely together and in a job-based comparison. For
both portions as a whole we plan to:
e Identify the appropriate survey sample of organizations and information to be collected
e Work closely with the City to identify appropriate benchmarks and then develop accurate survey
jobs descriptions for each benchmark
e Develop a comprehensive questionnaire to collect that information
Administer the survey
Statistically analyze and adjust the survey data as necessary
Report and present the results of the study
Performance Evaluation System
Milliman will review the current system, its forms, application, evaluation criteria and process. Based
on changes to job classifications, Milliman will recommend performance standards applicable to new
or revised classifications. In addition we will evaluate and recommend changes to the documentation,
measurement and management of performance at the City to align these practices with the City's
goals and values.
It is our intention to conduct this study with the following approach:
Collaboration
We believe that the best survey instrument, analysis and reporting will result from the consultants
working closely with City personnel at each stage. It is our intention to:
Provide sufficient explanatory material so that key stakeholders will understand the method, the
process and the results obtained
Develop the final report through close collaboration with City personnel
"State of the Art" Analytics
We believe that one of the pitfalls of common survey practice today is to separate the cash
compensation data from the benefits data. We propose conducting our analysis such that the City can
view the data both separately, element by element and aggregated together on a job basis for each of
MILLIMAN
the participants. For example, one element in our report could be base salary comparisons for each
benchmark job; another element could be comparisons of the cost-based value of each major benefit
component; and still another element could be a comparison of the total compensation provided to
each job (a roll-up of base salary, health and welfare benefits, retirement benefits, and any bonus
amounts).
This kind of analysis can aid the City in optimally allocating its resources, development of better
employee communications which focus on the value of the total package, and ensuring that the total
compensation package offered by the City is competitive in the marketplace.
Milliman's analytic approach will allow the City to determine its competitive position with respect to
each pay element as well as all elements in total. Specifically this will demonstrate in actual dollars
where surplus or deficits exist in the City's pay mix. The following table is an illustration of this type of
analysis.
Total Compensation Evaluation
(Representative Illustration)
Raze
Salary
ST[
C51
Medical
and Vision Dental
LTD
Sick Leave
Cash Out
life
Wsnance
Pension
RN¢e
Medical
Ocher
Co-,
Total
Comp
Mkt
Ratio
Off,, Clak
Clicm
$25,179
$0
$0
$2,339
$0
$128
$3,208
$445
$1,951
$0
$629
$34,179
87.4%
Alk,A,
$26,895
$1,205
$0
$4,116
$250
$281
$762
$474
S?555
$2511
$39,123
Recctfi mvt
Client
$26,354
$0
$0
S2,339
$0
$3(K
$2,295
$318
$2,042
SO
$659
$34313
90.0%
Mkt Avg
$26,587
$991
$0
$4,116
$250
$202
$547
$340
$2,526
$2,585
$38,144
Acc nunt
aunt
$42,738
$0
$0
$2,339
$0
$262
$1,968
$273
$3,312
$U
$1068
$51960
85.9%
\Ikt Avg
$N,20
$3,505
$0
$4,116
$250
$195
$945
$4A
$4,202
$2,585
$60,482
N,.B Clerk
Cl-,
$3?094
$0
$0
$2,339
$0
$188
$1,408
$195
$?487
$0
$802
$39513
97.0%
?Ikl Avg
$29,266
$852
$0
$4,116
$250
$164
$+45
$277
$2780
$2,585
$40,736
Dan EtI,, Clink
Client
$23,999
$0
$0
$2,339
$0
$150
$1,123
$136
$ 1,8611
$0
$600
$30,226
83.1%
Mk, Avg
$25,461
$746
$0
$4.116
$250
$145
$393
$245
$?419
$?585
$36,359
Fmgrmvntt/Analyse
Client
$57,517
$O
$0
$2,339
SO
$309
$2,320
5322
$4;160
$0
$1439
$68,736
96.9%
Mkt Avg
$54,961
$2,820
$0
$4,116
$250
$187
$507
$316
$5,217
$2,585
$74911
S-, Cmnl
Client
$31,939
$0
$0
$2,339
$0
$232
$1,741
$241
$?475
$0
$798
$39,766
96.6%
,Mkt A,,
$NMI
$1,285
$0
$4,116
$250
$174
$472
$293
$1_777
$2,585
$41,183
Fl«trnian
Client
$42,843
$0
$0
$2,339
$0
$252
$1,891
$262
$3,553
$0
$1,146
$55,286
85.5%
Mkt AT
$49,785
$10742
$0
$4,116
$250
$195
$945
$277
$4,730
$?585
$64,623
..\ICexnBa
Client
$26,813
$0
$0
$2,339
$0
$229
$1,716
3238
$2,078
$0
$670
$34,082
83.9%
Mkt Avg
$28,995
$I,I1AI
$0
$4,116
$250
$615
$392
$244
$2755
$2,58i
$40,641
]wbm;an
Client
548,2111
$O
$O
$2,339
$0
$181
$1360
$189
$3,736
$0
$1,205
$57,220
92.8%
Mkt Avg
$47,463
$1,899
$0
$4,116
$250
$159
$430
$267
$4,5W
$2,585
$61,677
Cook
Client
$29,x0
$0
$0
$2,339
$0
$MI
$1,654
$229
$2,252
$0
$727
536,481
90.3%
Alkt Arg
$28.931
$1,013
$0
$4.116
$250
$139
$378
$235
$2,748
$2,585
$40,3%
lab Tc m m
Chan
$35,728
$0
$0
S?339
$0
$IM
$1,258
$174
$2,769
$0
$893
$43,329
90.8%
\Ikt Arg
$15,010
$1751
$0
$4,116
$250
$123
$334
$207
$3,326
$$585
$47,702
Milliman will partner with City staff on each step of the project to ensure that the highest levels of
quality are maintained as well as to ensure that each activity is clearly focused on the City's goals for
the effort. The following brief summary of each activity reflects Milliman's approach.
MILLIMAN 6
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PLANNING: Milliman consultants will meet with a project Advisory Team to develop a detailed plan as
well as begin the development of a communication strategy for the project and its implementation.
Prior to this meeting, Milliman will review as much background information and data as the City can
make available regarding the City's compensation program.
COMPENSATION STRATEGY: Milliman will conduct interviews with key senior management for the
purpose of understanding the City's past pay practices. We will also use these interviews to develop a
strategy of compensation for the City, one that reflects desired competitiveness, the role of each
element, the linkage with performance (if any), desired degree of flexibility, the definition of the
"market," the degree of hierarchy and the degree of specificity desired in jobs, and other key elements
of the City's total pay program.
JOB CLASSIFICATION/ MEASUREMENT APPROACH: In order to slot jobs into appropriate pay ranges, the
City must use a job evaluation/measurement approach of one kind or another. We will review existing
practice and develop any modifications necessary to reflect the desired direction and strategy
identified in the first two steps. Classification approaches are varied and often use job descriptions
rather than broad classes. We will work with the City to determine which approach fits the City's
needs best. Milliman can either modify the existing approach or create a new process for use in the
City. The current trend in the market is to adopt a market-based approach to internal equity that relies
on compensation data to determine pay levels and internal relationships and to drive the design of the
classification system. This approach relies on a simple job measurement/slotting process to place
jobs without market data into pay ranges.
JOB DOCUMENTATION: Milliman will gather current information on the City's jobs using a JCQ (job
content questionnaire) developed in partnership with the Advisory Team. This instrument will capture
essential job duties, responsibilities, scope, complexity and minimum qualifications. The questionnaire
will be tailored to align with both the job measurement approach and desired differentiation for career
ladders. The questionnaire will be distributed to employees, completed and returned to Milliman for
analysis. Milliman will conduct interviews with a representative sample of employees to confirm job
content. For multi-incumbent jobs, a single questionnaire is preferred.
BENCHMARK SALARY SURVEY: Milliman will identify benchmark jobs for inclusion in a custom salary
survey. We will work with the Advisory Team to determine the most cost-effective and credible
approach to collecting market data. Our experience is that a total pay survey (cash and benefits) can
include up to 100- 110 jobs. The City may desire additional cash compensation data which can be
gathered from published survey sources if the market ends up being given a prominent role in the
City's pay philosophy. Our fee estimate provides an option for use of published data.
BENEFIT SURVEY (OPTIONAL): There are two approaches possible for the City here. We recommend
including benefits in the salary survey and developing actual values for each benefit analyzed and
then combining those values on a job and organization basis to develop total compensation for each
benchmark job. This is a very powerful way to analyze total compensation as it allows evaluating the
mix and magnitude of each element of compensation. The other approach is to use published benefit
data and provide a line-by-line comparison of the City's benefits to those described in the survey
source. This approach is less costly and does not allow assigning an actual dollar value to the
benefits nor does it allow combining the benefits' values with the cash compensation values to
compare total compensation.
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JOB SLOTTING AND INTERNAL EQUITY: For jobs not included in the benchmark analysis, Mllllman will
apply the job evaluation/measurement approach developed previously. We will ensure that these
evaluations are related to the market to the degree desired by the City. Once all jobs have been
evaluated, they will be assigned to a proposed salary structure that reflects the compensation
philosophy and approach to job hierarchy defined early in the project. Milliman will also analyze the
internal relationships among jobs to ensure that appropriate levels of internal equity are maintained.
IMPACT ANALYSIS: Milliman will model the impact of proposed changes to pay ranges and job
hierarchy on individual employees and on the total cost of compensation for the department.
RE-ASSESSMENT: Milliman will develop, in partnership with Human Resources, a process for
employees to request a classification reassessment in cases where there is disagreement with the
recommendations of the study. If the City adopts a "market driven" approach to pay, we anticipate that
the number of these kinds of appeals will be limited assuming that adequate training and
communication are carried out with respect to the process and the use of data. We will provide such
materials for the City to use if appropriate.
IMPLEMENTATION: Working with the Advisory Team, Milliman will develop an implementation plan to
assist the City in adopting any changes recommended as a result of the study. The plan will include
detailed timeline, costs, communication activities, training schedules, etc.
REPORTING: Final reports will be prepared for each group of employees documenting the project's
activities, findings and recommendations. To the degree desired, Milliman can participate in
presenting findings to key stakeholder groups.
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Milliman is a Seattle-based actuarial and human resource consulting firm founded in 1947 and
incorporated in Washington. Our offices are licensed to do business in nearly every state in the
U.S. Milliman is part of Milliman Global, a network of actuaries and management consultants
serving clients as recognized leaders in their respective countries. Milliman Principals share the
ownership of the corporation and are responsible for its management. At present time, Milliman
has over two hundred Principals in the United States.
In the United States, Milliman has over thirty consulting offices. These offices provide consulting
services across a broad spectrum of human resource areas including health and welfare plans,
retirement programs, investor education, record-keeping services, compensation and human
resources management, and organizational communications. In addition, our offices can
coordinate services throughout Milliman with experts in a wide variety of areas. The collective
resources of Milliman's thirty-two U.S. offices are available to every consultant staffed on this
project.
Financial Status of the Firm
Milliman is privately owned and managed by its Principals, who have been elected in recognition of
their technical, professional and business achievements. Milliman's revenues were over $522
million in 2007.
Research Capabilities and Resources
Milliman maintains an Employee Benefits Research Group in our Washington D.C. office. Our
research consultants, which include actuaries and attorneys, specialize in compensation and
benefits knowledge management and provide timely alerts and critical analyses of all emerging
compensation and benefits-related developments from Congress, the White House, regulatory
agencies, the federal courts, and other practice governing boards (such as the Financial Accounting
Standards Board).
Previous Experience
City of Seattle
John Hankerson and Stephanie Eng have conducted numerous projects for this client. The first
project was a comprehensive audit of their compensation and classification process. The audit
included a study of "best practices" among other municipalities, a review of their job measurement
tool, analysis of their competitiveness in the market, a review of their job documentation processes
and administrative processes and recommendations for change. The second project was an
executive pay program redesign that included an extensive market pricing component, redesign of
their performance appraisal process and recommendations on supplemental compensation
elements (e.g. time off, bonuses, etc.). The third project was a custom compensation survey of
executive, manager and information technology jobs at the City.
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City of West Palm Beach
John Hankerson and Greg McNutt conducted an extensive custom survey and published data
analysis to assess and then modify the City's compensation program. Presentations to the City
Council in support of making changes were provided by Milliman.
State of Colorado
John Hankerson and Greg McNutt completed the fourth year of audit services of the State's annual
market survey and salary structure adjustment effort. Our task has been to review the methodology of
the existing survey process, its conclusions and recommendations, and prepare a presentation of
findings and recommendations for the Legislative Audit Committee.
City of Olympia
John Hankerson, Stephanie Eng and Greg McNutt provide ongoing consulting services to this client
in reviewing executive total compensation and assisting with the development of a new pay
program for non-represented employees. Our work has included numerous market studies,
frequent meetings with a design team of city employees working on the project, interviews and
presentations to the Directors, new pay structure, simplified job measurement tool for non-priceable
jobs, new compensation philosophy statement, and salary administration guidelines.
City of Tacoma
The project team have recently completed a comprehensive total pay study for this City. Data
collected included other cities as well as utilities and roughly ninety benchmarks and benefits data.
Recommendations included a pay philosophy and new salary ranges. Our work included meeting
with the City Council and management throughout the study.
Below is a reference list of clients for whom this project team has provided classification and
compensation services:
Ms. Tina Nelson
Human Resources Analyst
City of Beaverton
503/526.2539
We are currently completing a classification and total compensation study for this City. The
classification portion is basically completed. The City has under five-hundred employees.
Mr. John Twitty
CEO & General Manager
City Utilities of Springfield
417/863.9000
This on-going client engaged Milliman to conduct a total pay analysis of its executive jobs as well as
its rank and file jobs. The utility has roughly one-thousand employees both represented and not.
MILLIMAN 10
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Mr. Patrick Cooney
Director Human Resources
City of West Palm Beach
561/494.1006
One year ago Milliman conducted a comprehensive analysis of the City's salary program including
job titles, pay grade, and pay administration practices. Our recommended changes were presented
to the City Council and approved after thorough discussion. The City employs under one-thousand
employees.
Ms. Shelley Middlebrooks
Compensation and Classification Director
University of Washington
206/543.2297
Total compensation study for over three-thousand employees, both represented and bargained.
Reviewed classifications, pay ranges and other pay policies. Meet with bargaining units to review
survey process and results when completed.
Ms. Michelle Colin
Senior Auditor
State of Colorado
303/869.2823
Milliman conducts an audit of the State's total pay survey and its application. The survey affects
more than five-thousand employees of the State. We review base pay as well as benefits and
present findings to the legislative audit committee of the state legislature.
Mr. Bill Gaines
Chief Executive Officer
Tacoma Public Utilities (City of Tacoma)
253/502.8378
Milliman conducted a total pay study primarily for the utility but that also included a number of key
general government jobs three years ago. We are currently engaged by the City in a
comprehensive classification and pay/benefits study that will result in totally revamped
classifications, pay ranges/steps, policies, and potential performance-based pay administration.
Bargaining units play a significant role in the process and Milliman meets both with management
and these bargaining units regularly. The market analysis will collect cash compensation
information as well as provide dollar values for major benefits in a way that the City and utility can
compare their plans and total pay to their peers. (Note: The City has recently undergone a change
in the HR function so the Director of the Utility can provide the most comprehensive reference for
Milliman.)
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Account Executive
Milliman Account Executive (Client Oversight/Project Management): The Milliman Account
Executive has overall responsibility for the outcome of client projects and directly responsible for
overall deliverables and client satisfaction. John Hankerson will fill this role. The Account
Executive will have responsibility for the day-to-day progress of the project, including assuring that
Milliman resources are available, when needed, to complete agreed-upon project tasks; create and
maintain the project plans and is directly responsible for meeting client expectations. The Account
Executive has responsibility for completion and acceptance of deliverables; and works closely with
the consulting team to assure resources are used appropriately.
John Hankerson - Account Executive. Mr. Hankerson has worked extensively with a number of
public, quasi-public and not-for-profit organizations in his seventeen years of consulting. Recently
he has worked with the University of Washington on a number of compensation studies for non-
represented and represented staff. In addition, he is the Account Executive for City Utilities of
Springfield, the Cities of Seattle and Bellingham, the State of Colorado, Energy Northwest, Puget
Sound Clean Air Agency, Port of Seattle, and Metro. He has helped a number of public sector
clients develop and manage performance-based pay programs and progressive range systems.
Project Team
Quality Oversight: The Milliman Quality Oversight Consultant has overall responsibility for providing
quality and strategic oversight to consulting activities. At Milliman we are committed to providing
the highest quality of consulting advice and services to our clients. One way we accomplish this
goal is to have experts review the work of other experts. Larry Daniels will fill this role.
Milliman Project Management (Project Strategy/Integration): The Milliman Project Manager has
overall responsibility for managing and coordinating compensation project elements and consulting
assignments. Greg McNutt will fill this role.
MILLIMAN
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Consulting Staff (Resource Consultants): Some individuals may perform project assignments
and/or technical assistance work. These consulting team members are specialists with
responsibility for completing assigned tasks. They will, for example; conduct data collection
activities, interpret findings, draw conclusions, develop recommendations, and participate in
meetings and reviews that relate to their particular area(s) of expertise. They will work with City
staff and other Milliman staff members to complete project tasks and other assignments. The
consultants who will fulfill this role include Stephanie Eng, Dave Evans, Jonathan Tsun and Lisa
Hughes/
Milliman Administrative Staff (Clerical Support): As required, they will assist the Milliman consulting
staff in administrative management tasks and perform clerical support, such as report production,
etc. Various members of the Milliman staff will perform this function.
Larry Daniels - Quality Oversight. Mr. Daniels will provide quality and strategic oversight to all
project deliverables. Mr. Daniels has over twenty years of survey management experience and
leads the survey group in Milliman's Seattle office. He has served as project manager for the
annual Puget Sound Regional Salary Survey since its inception in 1981. Similarly, he leads the
annual efforts to plan, conduct, and publish other major surveys, including the Northwest
Management & Professional Salary Survey and the Northwest Executive Compensation Survey.
Mr. Daniels also assists individual clients in conducting custom salary and benefit surveys, and in
the establishment of competitive and cost-effective salary and benefit structures.
Greg McNutt - Project Manager. Mr. McNutt will be responsible for managing and coordinating
compensation project elements and consulting assignments. Mr. McNutt has been involved in the
design and administration of a variety of compensation programs. In his eighteen years of
experience he has focused on working in the public sector, recently for South Carolina Education
Lottery, City of West Palm Beach, the State of Colorado and the Los Angeles Convention & Visitors
Bureau where he has managed extensive projects to collect, analyze and apply large amounts of
compensation data to client organizations. Additionally, he has managed and administered
compensation and retirement benefit plans for an international private-sector organization.
Lisa Hughes - Resource Consultant. Ms. Hughes will provide significant assistance in the
reclassification process. She has over fourteen years in consulting and compensation management
experience.
Stephanie Eng - Resource Consultant. Ms. Eng will provide significant assistance to the client
team on compensation analysis as well as survey administration and data management as needed.
Ms. Eng has more than twenty years consulting experience and manages custom survey activities
for the Seattle office of Milliman as well as consults to a number of organizations on compensation
issues.
Dave Evans & Jonathan Tsun - Resource Consultant. Mr. Evans and Mr. Tsun will provide
assistance to the project in the form of administration and data management for the custom survey.
Copies of the project team biographies are located in the Appendix of this proposal.
MILLIMAN
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The City of Rosemead (the City) is inviting qualified human resource consultants and professionals
to submit proposals for a review of its compensation, classification and benefits system to ensure:
The accurate assessment of job duties for each classification, the development of a job
measurement tool to provide competitive and fair compensation for City jobs
Competitiveness and equity of cash compensation and benefits
A competitive and equitable salary program, including administration
The development of a communication strategy that is explainable and defensible to all
stakeholders
Modification of existing performance evaluation system to align with updated classification
descriptions as well as the City's performance focus.
Milliman is responding to the City's request for proposals to conduct a review of its compensation
program and make recommendations for changes and improvements.
Scope of Work
The project will include the following activities:
Review of current pay philosophy and recommendations for improvement to align with
organizational strategy, philosophy and values, competitive "best practices," and clarity.
Review and modification of the classification, job measurement (evaluation) and related
structures to ensure equity and accuracy as well as provide the City with a system that serves
its need for career ladders and internal equity. The assignment of all employees to specific
classifications/jobs based on the actual work currently being performed.
The completion of a market benchmark analysis to include salary, (benefits optional) and other
forms of compensation to assess competitiveness and appropriateness of pay mix.
The assignment of jobs to appropriate pay ranges based on competitive information and the
City's philosophy of equity.
The development of a communication strategy to control the focus and content of
communication during the project and during the implementation of its findings.
Review and modification of the performance evaluation system
The development of an implementation plan to include employee appeals process.
The preparation of a draft and final report of findings, recommendations, and supporting
justifications.
MILLIMAN
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Outline of Tasks
Milliman, in partnership with the City, will:
Develop a thorough understanding of the City's current process through interviews, meetings
and a review of existing documentation.
Communicate regularly with the City to review project milestones.
Review and evaluate the current compensation program and develop recommendations for
changes that will better align the City's compensation and classification process with its goals.
The application, usability, and appropriateness in meeting the City's pay program goals will be
preserved in all recommendations.
Compare and analyze the compensation and benefits system with target labor market.
Conduct regression analysis of general pay competitiveness as well as individual job analyses.
Develop a job measurement/evaluation approach/tool that meets the City's pay philosophy and
goals for recruitment and retention of personnel.
Assign employees to appropriate classifications and modify titles and content as needed.
Assign non-benchmark jobs to appropriate pay ranges.
Ensure accuracy of job/class descriptions
Ensure effective and appropriate performance evaluation process, system and forms
Ensure effective communication throughout the study and after by developing a comprehensive
implementation and communication strategy at the outset of the study effort, including
communicating with City staff on all aspects of market analysis, benchmarking, plan design,
and best practices.
Program Objectives
Milliman approaches projects like this one with a number of criteria that help us both to evaluate our
client's programs and design new options for consideration. These criteria include:
Internal equity: the maintenance of a compensation structure that fairly and objectively reflects
each job's value relative to other jobs within the organization.
External competitiveness: assurance that the City's pay structure is adequate to attract, retain
and motivate employees.
Effective administration: a program that is efficient, easy to communicate and understand, and
responsive to changes in the marketplace.
MILLIMAN 15
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Effective communication: plans and programs in place to ensure that employees understand
how the pay program functions and the goals it is intended to achieve.
Compliance: full compliance with all pertinent state and national guidelines and regulations
regarding compensation.
Project Components
Project components include job analyses, competitive market analysis, salary structure review,
performance evaluation, administrative systems and communications.
We believe that communications are crucial to an organization's efforts to manage change, whether
that change is a simple modification to an existing program or an entire shift in direction. Our
consultants understand how public jurisdictions operate; we know how to manage human resources
and foster effective communication. We have expertise in conducting employee focus groups and
surveys, and planning communications strategies.
The following is an overview of Milliman's suggested approach to achieve the required scope of
services in the project:
Planning and Communication
Since Milliman typically conducts projects in collaboration with our clients, we suggest the City form
an Advisory Team for this project. This Advisory Team should be comprised of the project
coordinator and several other City representatives who have input and perspective regarding the
strategic direction of the pay program. The Advisory Team will give Milliman feedback and provide
information/data on the current program. Additionally, it will provide feedback on results and
findings as they are developed. We do not anticipate that the City will need to dedicate staff either
exclusively or extensively to this effort.
The first step will be a planning meeting attended by Milliman and the City Advisory Team to finalize
and refine the project work plan, scope and timeline. At this meeting we will review and agree on all
major project deliverables and any other issues that need to be resolved before the project begins.
The City will want to develop a communications plan at the start of this project, anticipating that
some change will result from the analysis. The process of developing a communications plan
involves the following:
Research. We want to determine what employees and other key audiences know and feel
about the current pay program, what media have been used to communicate with employees in
the past (and how well they worked!) and what other significant events are taking place that
might affect the communications.
Planning. We can help you prepare a communications plan that will identify specific
communications objectives, key audiences, important themes and messages, resources, roles
and responsibilities and best media to employ. The planning process is usually conducted in a
one-half day meeting with your Advisory Team. A Milliman consultant facilitates this meeting.
Members of the Advisory Team prepare for the meeting by reviewing and completing a
MILLIMAN
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compensation communications planning guide. The outcome of this step is a communications
roadmap that will guide us through communicating the project and its outcomes.
Our price estimate includes consulting fees to develop the communication plan. Fees for additional
communications work--if needed--can be determined once the plan is established.
Data Review
It is important for your consultant to have any information related to project elements as early in the
project effort as possible. We suggest that prior to the initial planning meeting, the following
documentation be gathered and transmitted to Milliman so that we can review it prior to this
important meeting:
Current pay structure and other related information.
Current documentation and communication materials.
e Results of any recent pay studies.
Organizational information including department organization charts, mission statements, etc.
e Copies of existing classifications and/or job descriptions.
Copies of the job evaluation plan and the evaluations currently assigned to jobs.
Information regarding the performance evaluation system including historical data, existing
forms, samples of past evaluations, etc.
Communications to employees about the pay system over the past twenty-four months.
e Current employee and job compensation information in electronic format.
Pay Plan Effectiveness Evaluation
We use certain criteria in evaluating the effectiveness of a pay plan, including competitiveness,
perceived fairness, linkage with organizational values, administrative ease, consistency of
application, and retention and attraction features. To assess effectiveness, we must first determine
the goals the organization seeks to realize through the pay program itself. This effort can also allow
any changes to the philosophy to serve as a "ruler" against which to measure the programs that are
in place.
Pay Philosophy Review
We propose to conduct interviews with key management to gather their perspectives on the City's
"business," its strategy in the short and long-term, and perceptions about the pay system. Each
interview will last approximately 45 minutes and will cover a pre-determined set of questions.
Milliman will prepare a preliminary interview guide for review and approval by the Advisory Team
prior to actual interviews. The following categories of questions will be included initially in the guide:
MILLIMAN 17
Competitiveness of current total compensation system and desired competitiveness in the future
Strengths and weaknesses of the system
Importance of internal equity
Ability/willingness of City supervisors to "manage" pay issues
Performance orientation
Mix of pay and benefits
Role of each element
e Effectiveness
For the purpose of estimating fees, we have assumed up to eight interviews.
Job Review and Development of Classification/Measurement System
Specifically, we will:
Review the City's "job measurement philosophy."
Review advantages/disadvantages of current job hierarchy.
e Identify strengths/weaknesses in current job measurement approach and suggest changes
"best" suited for the City.
e Perform gap analyses of current system as opposed to "best" suited.
C Identify barriers and issues associated with recommended changes.
Develop solutions to barriers and issues.
Any change in the job measurement philosophy is likely to impact other programs related to how
the City deals with its employees, including compensation, training and development, recruiting,
selection, labor relations, seniority issues and various administrative activities.
The result will be recommendations for classification/job measurement that can be used to slot jobs
into the City's pay structure. (Note: Should the City move towards a "market-based" approach to
job measurement, a tool of some kind will still be required to slot non-market jobs into the pay
structure.) It will include:
A. Supporting documentation.
B. The ability to be regularly used to measure and compensate jobs while preserving the City's
stated pay philosophy (i.e. link to market, internal equity, etc.).
MILLIMAN 18
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C. A mechanism to allow for modification in the system in event of labor market shifts.
Total Compensation (Salary and Benefits) Assessment - Custom Survey
Selection of benchmarks (It may be that the City will adopt a market-based approach, in which case
we will collect data on most of the City's jobs rather than a "benchmark" selection.)
The following criteria are ones that we have found to be valuable in selecting benchmarks for a pay
study:
Market comparability: it is important to select jobs that are commonly found in other
organizations that are being surveyed
Organizational hierarchy: it is important to select jobs that represent the full range of size of
jobs being included in the study, from the smallest job to the largest
Employee representation: it is important to select jobs that represent large numbers of
employees whenever possible
Cross-functional representation: it is important to select jobs that represent all of the functions
within the organization, from administration to engineering to maintenance
Key managers should review the preliminary list of benchmark jobs to ensure that data are
collected on the "right" jobs, jobs that will provide the best set of data for the organization. The final
list will be submitted for approval prior to the development of summary descriptions for inclusion in
the survey instrument.
Identification of survey sample
To identify the appropriate survey sample of organizations, consideration must be given to the
relevant labor market of the City. Milliman will identify for all benchmark job classes the types of
organizations the City competes with for labor talent. In addition, we have found that management
jobs often require selecting peer cities that are out of state in order to have sufficient sample size.
We recommend close to thirty (30) organizations be targeted for participation. Participation rates
generally do not exceed 50% so the number of organizations invited to participate must be large
enough to ensure a reliable result.
Once the appropriate organizations have been identified, contact information must be obtained.
Milliman will determine the appropriate contact person for all organizations where the City is unable
to provide such data.
We also will develop specific data on cost of labor in each market where a survey participant is
located. These data are critical to ensuring that a fair comparison is made when evaluating
compensation practices.
The process of selecting target organizations is directly related to the selection of benchmarks since
participants must be likely to employ individuals in the benchmark jobs.
MILLIMAN 19
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Identification of information to be collected
The information collected as part of this study will provide the City with a picture of how its
employees' compensation compares with that of its competitors. We recommend the following
information be collected:
e Organization name
Type of industry
Location of organization
o Size of organization of employees, revenues, operating budgets, etc.)
o Number of incumbents in each benchmark job
o Strength of job match
e Whether job is part of a collective bargaining agreement
Average base salary for each benchmark job
o Average bonus amount paid to each benchmark job
o Salary range minimum, midpoint, and maximums
For the benefit portion (if selected by the City), we will collect the following information (additional
benefits can be included as needed by the City):
o Premium or contribution to the medical plan across tiers
o Premium or contribution to the vision plan across tiers
Premium or contribution to the dental plan across tiers
e Rate per $1,000 of life-insurance coverage (and level of coverage provided by employer)
Premium or contribution to employee AD&D plan
Premium or contribution to employee long-term disability plan (rate per $100)
Sick leave or short-term disability benefits (levels, costs, etc.)
o Annual percent match for defined contribution plans (401 k, etc.)
Defined benefit formula(s) and/or other retirement plans
Paid time off schedule
Estimated percent of payroll spent on entire employee benefit program
The data collection process is critical to the success of the project as our final analysis will be
contingent upon the data we receive back.
Development of survey mob descriptions
It is our general practice to develop survey descriptions based on existing job documentation
(descriptions or class specs), but we believe that using the job content questionnaires along with
job descriptions will likely produce the best survey descriptions:
Milliman will develop summary (capsule) job descriptions for each benchmark job using existing
documentation and data collected through the JCQ (job content questionnaire). These
descriptions will then be reviewed by the appropriate City personnel (managers over the job,
human resource representatives, etc.).
MILLIMAN
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Development of survey questionnaire
Milliman will compose a draft of the survey questionnaire that will include capsule descriptions of all
benchmark jobs to be surveyed and the information described above. The City will then have an
opportunity to review the questionnaire. Milliman will make any changes, modifications or revisions
needed and a final draft will be submitted for approval prior to distribution.
Administration of survey
Milliman will duplicate and distribute the survey questionnaire to the identified survey sample of
organizations as well as to the City. After surveys have been distributed, Milliman will make follow-
up telephone calls to targeted participants to encourage participation. Milliman will also be
available to answer questions about the survey and to help participants complete their forms.
Milliman staff will call those organizations that have not submitted completed questionnaires soon
after the submission deadline to further encourage participation. Milliman will collect, code, and
review for completeness all survey responses. Milliman will contact participants if additional
information or clarification is needed.
Statistical analysis of survey data
Data will be input into our survey processing software by Milliman staff. A thorough review of the
data will be performed to flag any abnormal or extreme responses from participants. Milliman will
discuss any of these types of responses with survey participants to determine how that information
should be handled.
Once Milliman is satisfied that the data is "clean" we will begin the statistical analysis. This will
include generation of summary tables identifying key market comparison points such as the 25th
percentile, 501h percentile, 75th percentile, and mean of all data elements collected. Depending on
the number of responses from each of the market segments, these market points can be calculated
for each segment or combination of segments.
After the survey data are analyzed, Milliman will then compare the survey results to the City's
compensation data. For each benchmark job we will provide a comparison of competitiveness.
Because the benefit portion of a survey like this is complex, we have developed a valuation
approach that ahs been successful with other organizations. Our general philosophy and methods
are defined below.
Base employer- refers to the median employer in the study.
Comparison employer- refers to any employer to which the base employer is being compared.
Relative value - refers to the value of a particular comparison employer's plan relative to the
value of the base employer's plan.
A relative value will be assigned to the benefit plan before applying any adjustments. This relative
value is based on the characteristics of the base employer's demographics and the provisions of
the comparison employer's benefit plan. This approach removes some of the differences that
impair the comparability of the results. For example, two employers could have identical benefit
MILLIMAN
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plans; however, because of geographic location or employee demographics, the two plans may
have significantly different costs. The relative values do not only look at the actual cost the
employer is paying, but rather an assigned value that reflects the differences in benefit provisions.
These adjustments include:
Coinsurance amounts
Co-pays
e Limits
Accrual and length of service
4 Geographic cost differences
Plan provisions
Employee contributions
e Demographics of covered population
Our actuarial methodology utilized for all variables will be fully documented, and where applicable,
sources of references will be noted.
For health care costs, the final report can include a fixed dollar per employee or a percentage of
wages, as long as payroll information submitted from the base employer and the comparison
employers are on the same basis.
Milliman has a special understanding of the benefit needs of public-sector employers, gained
through our consulting work for various states, counties and cities. Our consulting staff - which
consists of qualified group actuaries, underwriters, and experts in managed care, finance and
administration - will bring a unique partnership of talent to address the variety of issues facing the
City.
After the survey data is analyzed Milliman will then compare the survey results to the City's total
compensation data. For each benchmark job we will provide a comparison of each element of the
total compensation package as well as an aggregate comparison for all elements of the total
package. The following illustrations are samples of potential analyses that could be used.
Retirement Benefits Plan Evaluation
(Representative Illustration)
75th%
Avg
5DIh%
Client
25th %
u.nv.
ii xrv.
Il.six
9N%
0% 2% 4% 6% 8% 10% 12% 14%
Percent of Base Pay
MILLIMAN 22
Long-term Disability Plan Evaluation
(Representative Illustration)
75th%
Avg
50th%
25th%
Client
-'U 016%
013%
%
0, 16
0.13%
013%
0.00% 0.02% 0,04% 0.06% 0.08% 0.10% 0.12% 0.14% 0.16% 0.18%
Percent of Base Pay
Job Slotting and Internal Equity
We will use the job evaluation/classification methodology developed in this study to establish
appropriate range placement for jobs consistent with the pay philosophy developed in the study. If
the City elects to adopt a market-based approach, only a limited number of jobs will likely be
evaluated. If another approach is selected, Milliman will apply the evaluation tool consistent with
the desired approach. In addition, we will assess both internal equity and external competitiveness
of all jobs once the job evaluation/slotting effort is complete. Once jobs have been measured
according to their job content, each job can be represented on a graph by locating a dot at the
intersection of the job content point value (horizontal scale) and the annual salary (vertical scale)
being paid to each person occupying each particular job. The chart that follows is an example
illustration of this process:
$110 0M _
$90,000 _
m $70,000
550,000
$30,000
510,000
II 12 13 14 15 16 17 18
Crade
Actual - - - 1211 % of Actual - - - - rill%. of Actual
The line drawn through this pattern of dots is a "line of central tendency." It portrays a pattern of salary practices for the jobs on the
graph. This graph allows comparisons to be made among the salary practices within and among occupational groups in the organization.
These comparisons facilitate a determination of the internal equity of the existing compensation program. In addition, the analyses
enable an evaluation of the current grade structure and highlights areas of concern or areas in need of modification. The above graph
also contains lines at 80% and 120% of the "line of central tendency." These indicate a traditionally acceptable range around the
organization's pay practice.
MILLIMAN 23
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Impact Analyses
Milliman will model the impact of proposed changes using a variety of different assumptions,
reviewing the findings with the Advisory Team as appropriate before finalization of
recommendations. Possible analyses include costs of bringing employees to the minimums of
recommended ranges, costs to maintain certain range position and costs to mirror the desired
market competitiveness level.
Implementation Plan
Implementation activities are dependent on the nature of plan changes and new plans that result
from the study and design efforts. Anticipating the precise requirements of any
implementation/conversion is impossible at the start of a project. Some or all of the following
activities might be needed and appropriate for the City:
Manager/supervisor briefings
Announcement letters
Personal compensation statements
All-employee meetings
Scripted presentations for managers/supervisors to share with staff
Frequently asked questions (FAQs) sheets
e Follow-up training after six months
e Newsletters, brochures, summaries for employees
e Video presentations
As part of the project, Milliman will recommend the appropriate implementation activities that will
best ensure successful implementation of any changes. Consulting fees in this proposal are for the
development of an implementation plan. Consulting fees associated with any assistance that the
City might require with implementation will be provided once the specifics of implementation
activities are known and agreed to.
Re-Assessment
Working with the Advisory Team, Milliman will develop a process that allows employees who wish
to request a review of the recommended classification. Milliman will participate in this review and
provide a final recommendation based on the content of the appeal.
MILLIMAN
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Performance Evaluation System
Milliman will recommend modifications to the process, the forms and the criteria used to measure
and evaluate performance at the City. Recommendations will be reviewed with the Advisory Team.
Where job classifications have changed in ways that would affect the performance standards for the
classification, Milliman will propose new performance standards that are related to the class
specifications and in line with current employment laws.
Report Development and Presentation
A written report documenting the findings, conclusions and recommendations will be prepared and
delivered to the Advisory Team. Milliman will work with the Advisory Team to develop a
presentation of findings and recommendations. In addition, Milliman staff will participate in this
presentation to the degree desired by the Advisory Team. We often find that the internal staff are
the most appropriate persons to deliver the bulk of the presentation, but we are willing to work with
the City as extensively as desired.
We propose a variety of reports for the City related to this project and will customize this element of
the project to meet the City's specific needs. What follows below is a description along with a
limited sample of the reports we suggest for consideration initially.
Classification and Job Analysis
Exec Asst,Sr
Senior Executive Administrator
Police Department
Labor Relations Coord
Senior Labor Relations Analyst
Public Utilities
Labor Relations Spec
Labor Relations Analyst
Personnel Department
Personnel Analyst
Benefits/HRIS Analyst
Personnel Department
Personnel Analyst
Compensation Analyst
Personnel Department
Personnel Analyst Supv
Compensation Supervisor
Personnel Department
Personnel Analyst,Asst
Administrative Coordinator
Personnel Department
Personnel Analyst,Asst
Benefits Assistant
Personnel Department
Personnel Analyst,Asst
HRIS/Compensation Assistant
Personnel Department
Personnel Analyst,Sr
Senior Compensation Analyst
Personnel Department
Personnel Analyst,Sr
Senior Employment Analyst
Personnel Department
Personnel Analyst,Sr
Supervisor, Benefits
Personnel Department
Personnel Analyst,Sr
Senior Benefits Analyst
Personnel Department
Personnel Analyst,Sr
Senior Compensation Analyst
Personnel Department
Personnel Spec
Employment Specialist
Public Utilities
MILLIMAN 25
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Custom Compensation Survey
ISurvey ABC Avg ABC/ Mkt # of # of Strength of
Job Code Survey Job Title Base Pay 50th Orgs Incumb Match Base 25th Base 50th Base Avg Base 65th Base 75th
201
A¢ounting Tlanagcr
$77,052
97%
8
9
2.0
$71,850
$79,642
$76,347
$81,998
$83,568
101
Administrative Sccretag - Department
$51,641
103%
7
19
21
$42,312
$50,322
$51,012
$55,960
$59,718
102
Admininmticc Sccrewy - Division
$43,294
95%
10
40
2,2
$44,328
$45,415
$48,217
$48,622
$50,7611
601
Assistant City P.nglnccr- Capital
$78,978
90%
8
10
2.0
$86,918
$87,636
$86,846
$88,543
$89,147
602
Assistant Public Works IRrcctor
$89,196
104%
3
5
2.3
$84,778
$85,509
$94,039
$93,624
$99,034
401
Associate Nanncr(IF,g Range)
$63,300
95%
7
13
19
$64,580
$66,324
$66,394
$69,303
$71,290
"Normal Range" Around the Market 50th% (Public and Private)
$150,000
$120,000
d
$90,000
f
$60,000
$30,000
$30,000
$60,000 $90,000 $120,000
Job Size
X80% -Mkt 50th - 120%
MILLIMAN
$150,000
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Summary Market Report
Accounting Manager
$77,052
94%
$74,081
$82,367
$82,877
$90,982
Administrative Assistant (Exec Asst to City Admin)
$66.552
102%
$58,043
$65,323
$66.297
$72,947
Administrative Secretary -Dept
$51,641
102%
$44,792
$50,769
$51,233
$58,064
Administrative Secretary -Division
$46,009
102%
$40,489
$45,147
$46,092
$50,360
Asst. City Engineer
$93,648
102%
$83,182
$92,189
$90,540
$96,758
Asst. Director - Public Works
$89,196
101%
$80,568
$88,245
$91,848
$100,098
Budget Analyst
$62,316
98%
$54,846
$63,343
$63,545
$69,482
Budget Manager
$71,592
80%
$80,870
$89,467
$90,766
$104,185
Building Inspector
$57,076
97%
$52,902
$58,834
$58,862
$68,527
Building Official
$93,648
106%
$74,808
$88,689
$88,699
$100,444
Building/Planner Tecitnician(Building Permit Specialist)
$52,012
112%
$42,687
$46,401
$48,265
$52,352
City Administrator
$134,688
94%
$142,776
$142,900
$143,114
$143,345
City Attorney
$111,060
94%
$105,619
$118,324
$119,830
$133,598
City Clerk
$60,360
62%
$61.692
$73,392
$72,539
$80,923
City Engineer
$98,340
91%
$98,527
$107603
$108,233
$119,151
Structure Reports
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Public Works Supervisor
$79,512
86%
$87,976
$73,739
$92,174
Planning Manager-Current
$75,210
82%
$90,853
$73,739
$92,174
Planning Manager-Long Range
$80,904
88%
$91,608
$73,739
$92,174
Project Manger
$82,163
89%
$93,692
$73,739
$92,174
Asst, City Engineer
$93,648
102%
$94,931
$73,739
$92,174
WJJ7P Protect Director
$80904
88%
$95,070
$73,739
$92,174
Asst. Dmik,t r-Public Works
$89,196
97%
$95,357
$73,739
$92,174
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Building Official
$93,648
92%
$95,742
$81,114
$101,392
Budget Manger
$71,592
71%
$98,297
$81,114
$101,392
Police Lieutenant
$70,415
69%
$101257
$81,114
$101,392
Director- Information Technology
$108,420
107%
$105,318
$81,114
$101,392
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City Engineer
$98,340
88%
$114,532
$89,225
$111,531
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Deputy Chief
$89,184
73%
$116,585
$98,147
$122,684
Director- PIN B Comm Development
$111,648
91%
$123,907
$98,147
$122,684
Director - Public Works
$108,420
88%
$126,908
$98,147
$122,684
City Attcmey
$111,060
91%
$127,488
$98,147
$122,684
Judge
$108,634
89%
$128,162
$98,147
$122,684
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Director - Finance
$108,420
80%
$133,222
$107,962
$134,952
Police Chief
$108,420
80%
$138,504
$107,962
$134,952
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City Administrator
$134,688
91%
$143,167
$118,758
$148,448
MILLIMAN 27
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The Milliman compensation consulting team is a seasoned team who have years of experience and
education as well as strong working relationships. Mr. Hankerson and Ms. Eng have worked
together for over seventeen years and together they have worked with Mr. McNutt for ten years.
The three of them joined Milliman over six years.
The team is effective as a unit and maximizes the benefits received by clients by ensuring that the
most appropriate consultant works with each client issue. In addition, Milliman assigns two
consultants to work closely on every client project so that at any time, should the primary consultant
be unavailable, another consultant is fully up to speed and can respond immediately to the client's
needs/requests.
Our experience ranges from managing large projects like the City of Seattle total pay study with
fees in excess of $100,000 to smaller pricing and classification work for Puget Sound Clean Air
Agency at under $12,000 per year. We regularly conduct benchmarking studies and classification
reviews for a variety of public sector clients: cities, agencies, states and other quasi-public
jurisdictions. The State of Colorado has retained this consulting team for seven years to conduct
regular assessments of management and implementation of the State's classification and
compensation program. We are currently conducting a very similar study for the City of Tacoma
that involves comprehensive classification, compensation and benefits analysis for over 3,000
employees in bargaining jobs as well as non-bargained. The Milliman team that will work with the
City brings to the project considerable consulting expertise and benefits. These include:
Consultants who have experience working with a wide variety of both private and public-sector
organizations on the design and implementation of classification and compensation programs
Significant experience analyzing and developing innovative pay programs to meet changing
times for public sector entities
e Extensive experience in conducting literally hundreds of market studies for dozens of public
sector organizations
Our salary survey library contains numerous published surveys available in the market. In addition,
we have a number of proprietary surveys and databases developed for clients, including data
collected for public and quasi-public jurisdictions. For example, our survey resources include
surveys from Mercer Human Resources Consulting, Watson Wyatt, Hay Group, Hewitt, Towers
Perrin, Dietrich & Associates, Abbott Langer, Economic Research Institute, Radford, Bureau of
Labor Statistics, and a wide variety of regional and local data.
The consultants included in the project team for the City also have extensive experience working
with a wide variety of classification and compensation approaches. Our consultants have multiple
years of experience consulting on the Hay Guide Chart Method of job evaluation. We have worked
with other systems including the Colgate System, the Decision Band Method, the Position Appraisal
Method (PAM) to name just a few. In addition, we have designed and/or modified literally hundreds
of evaluation tools for our clients. These efforts have focused on a number of specific goals:
Simplifying the process of assigning jobs into a hierarchy.
Improving the link between the measurement tool and the marketplace.
MILLIMAN
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Improving the connection between organizational values (what an organization wants to pay
more dollars for) and the compensation program.
. Increasing credibility among employees with the processes used by human resources.
MILLIMAN 29
Task
Consultant
Timing-I
FHoursA
lConsulting es
Classification
Planning & Communication
Hankerson/McNutt
Week 1
8
$2,000
Background Data Review
Hankerson/McNutt
Week 1
6
$1,200
Pay Plan Effectiveness Evaluation
Hankerson/
Weeks 2-3
20
$3,400
Pay philosophy, salary ranges, job
McNutt/Eng
measurement, administration
Job Analysis
McNutt/Eng
Weeks 4-10
25
$4,500
Job Content Questionnaire
Employee Interviews 3 consultant days)
McNutt/En
24
$4,800
Classification (-60 titles)
Development of measurement system
Hughes/
Weeks 8-15
60
$7,000
-Titles, assignment to classes
Hankerson/
McNutt
-New job descriptions
Communication
Orientation and Briefing Sessions
Hankerson
Weeks 1-2
15
$2,500
Ongoing Communication
Ongoing
20
$1,500
Advisory team meetings 4
Hughes
Ongoing
25
$3,000
Draft report reviews
Inc
Preliminary review of findings
7
$1,000
Compensation
Custom Salary Survey
Eng/Evans/Tsun
Weeks 12-
80
$22,000'
-Up to 40 benchmarks
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-Between 20 and 30 participants
Published Salary Data (^20 jobs) "
Evansrrsun
Weeks 14 -
1 hr/job
$300/job or
Match jobs to multiple survey sources
20
$6,000
Benefit Survey (optional, #1 )
Hankerson/Eng
Weeks 14 -
50
$10,000
Benefit Stud (published data, optional, #2
20
10
$2,500
Job Slotting, Equity & Sala Ranges
Hankerson/McNutt
Week 21
12
$1,200
Impact Analyses
Hankerson/
Week 22
6
$1,400
McNutt
Performance Evaluation System
Hankerson/
Ongoing
15
$2,800
Hughes
Implementation Plan
McNutt
Week 23
8
$1,400
Report Development & Presentation
Hankerson
Week 24-
14
$2,200
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Re-assessment
En
Weeks 26+
20
$4,000
Totals
435`
$81,900
Additional consulting services
$225/hour
'Assumes full benefit valuation. Collecting general benefit plan info and comparing on a feature basis will lower the price by $7,500.
-Optional, depending on City pay philosophy but included in the total price (market vs. internal equity)
MILLIMAN 30
Milliman is prepared to commence the project upon reward of the contract. We do not foresee any
obstacles presented by our other business obligations to meeting this timeframe. Our experience
has been that clients typically run into internal delays. We have designated adequate resources to
the effort and are confident that these resources will be available as needed by the City.
We will commit to a "not-to-exceed" total fee amount once the precise scope of the project is
determined by the City. We anticipate travel expenses (airfare, lodging and meals) related to six
consultant trips to be no more than $3,200 for the scope of services under this request for proposal.
These are additional and billed at cost.
The above fees are estimates based on our understanding of the City's request. We are eager to
work with the City on this opportunity and would be happy to adjust both scope and fees to reflect
the City's expectations and resources. This proposal is valid for ninety days from receipt by the
City.
It is Milliman's policy to bill monthly for fees and expenses incurred in the previous month.
MILLIMAN 31
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Milliman proposes the following language be included in the contract:
Limitation of Liability. Milliman will perform all services in accordance with applicable professional
standards. The parties agree that Milliman shall not be liable to the City of Rosemead, whether in
tort, contract or otherwise, for any damages in excess of three times the professional fees paid to
Milliman with respect to the work in question. In no event shall Milliman be liable for lost profits of
the City of Rosemead or any other type of incidental or consequential damages. The foregoing
limitations shall not apply in the event of the intentional fraud or willful misconduct of Milliman.
Disputes. In the event of any dispute arising out of or relating to the engagement of Milliman by the
City of Rosemead, the parties agree that the dispute will be resolved by final and binding arbitration
under the Commercial Arbitration Rules of the American Arbitration Association. The arbitration
shall take place before a panel of three arbitrators. Within thirty days of the commencement of the
arbitration, each party shall designate in writing a single neutral and independent arbitrator. The
two arbitrators designated by the parties shall then select a third arbitrator. The arbitrators shall
have a background in either insurance, actuarial science or law. The arbitrators shall have the
authority to permit limited discovery, including depositions, prior to the arbitration hearing, and such
discovery shall be conducted consistent with the Federal Rules of Civil Procedure. The arbitrators
shall have no power or authority to award punitive or exemplary damages. The arbitrators may, in
their discretion, award the cost of the arbitration, including reasonable attorney fees, to the
prevailing party. Any award made may be confirmed in any court having jurisdiction. Any
arbitration shall be confidential, and except as required by law, neither party may disclose the
content or results of any arbitration hereunder without the prior written consent of the other parties,
except that disclosure is permitted to a party's auditors and legal advisors.
Choice of Law. The construction, interpretation, and enforcement of this Agreement shall be
governed by the substantive contract law of the State of California without regard to its conflict of
law provisions. In the event that the limitation of liability provision is not enforceable under
California law, the parties agree that New York law and not California law will apply to that provision.
In the event that any provision of this agreement is unenforceable as a matter of law, the remaining
provisions will stay in full force and effect.
Third Party Distribution. Milliman's work is prepared solely for the use and benefit of the City of
Rosemead in accordance with its statutory and regulatory requirements. Milliman recognizes that
materials it delivers to the City of Rosemead may be public records subject to disclosure to third
parties. However, Milliman does not intend to benefit and assumes no duty or liability to any third
parties who receive Milliman's work in this fashion. To the extent that Milliman's work is not subject
to disclosure under applicable public record laws, the City of Rosemead agrees that it shall not
disclose Milliman's work product to third parties without Milliman's prior written consent.
MILLIMAN
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JOHN HANKERSON
Principal & Practice Leader, Strategic Rewards
John Hankerson leads Milliman's strategic rewards practice in the northwest. John works with
organizations in developing and implementing strategic pay programs that maximize the
effectiveness of base pay design, incentive pay programs, performance management systems
and executive compensation plans. His recent work with organizations has focused on
building strong linkages between business strategy and pay program design across all
employee groups.
EXPERIENCE
John has over eighteen years of experience in the design and implementation of employee
pay and incentive pay programs. John has worked with a number of organizations in
developing employee and climate surveys, assessing the "state of the union" within
organizations, and conducting "gap analyses" identifying gaps between what is desired and
what is. He also has extensive experience in the design and administration of a wide variety
of variable pay systems. John's consulting experience includes compensation philosophy and
strategy development, short and long-term incentive design, executive pay and total
compensation strategy. He has in-depth experience in the telecommunications, utility, not-for-
profit, health care, pharmaceutical and high-technology industries.
CLIENTS
Sound Transit
City of Olympia
City of Bellingham
Coinstar
City Utilities of Springfield
Les Schwab Tires
South Carolina Education Lottery
University of Washington
EDUCATION & ACHIEVEMENTS
State of Colorado
City of Seattle
City of Tacoma
Cell Therapeutics
Energy Northwest
Metro Portland
ZymoGenetics
City of Richland
M.B.A. from Stanford University
Frequent speaker at compensation and human resource management seminars across the
Pacific Northwest
Member of WorldatWork
Member of the Northwest Compensation Forum
MILLIMAN
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GREG MCNUTT
Senior Compensation Consultant
Greg McNutt is a senior consultant in the strategic rewards practice in Milliman's Seattle
office. Greg assists organizations by analyzing and designing compensation and human
resources programs including strategic pay strategy, job analysis, external market evaluation,
and salary structure development.
EXPERIENCE
Greg has over eighteen years of experience with both employee and executive pay programs
for a variety of public and private sector organizations. He also has experience in the design
and administration of custom salary surveys and the design and implementation of
performance management systems.
CLIENTS
Sound Transit
ZymoGenetics
Sacred Heart Medical Center
T-Mobile
City of West Palm Beach
Oregon Lottery
EDUCATION & ACHIEVEMENTS
State of Colorado
Federal Home Loan Bank of Seattle
Metro
Los Angeles Convention & Visitors Bureau
South Carolina Education Lottery
City of Tacoma
Bachelor of Business Administration degree with a concentration in Human Resources
Management from Pacific Lutheran University, Tacoma, Washington
Member of WorldatWork
Certified Compensation Professional
MILLIMAN
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LISA HUGHES
Senior Compensation Consultant
Lisa Hughes is a senior consultant in the strategic rewards practice in Milliman's Oakland
office. Lisa assists organizations by analyzing and designing compensation programs
including job analysis, external market evaluation and compensation database management.
EXPERIENCE
Lisa has more than fourteen years of experience in the design of effective human resources
and compensation programs for a variety of public and private sector organizations, both as a
consultant and as in-house expert and manager. She also has extensive experience in the
design and administration of salary and performance management programs.
CLIENTS
Coinstar Cell Therapeutics
City of Seattle State of Colorado
City of Richland Energy Northwest
Sacred Heart Medical Center J.Paul Getty Museum
EDUCATION & ACHIEVEMENTS
Bachelor of Science, Business Administration with an emphasis in Human Resources
Management from California State University, Northridge
Member of WorldatWork
MILLIMAN
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STEPHANIE ENG
Compensation Consultant
Stephanie Eng is a consultant in the strategic rewards practice in Milliman's Seattle office.
Stephanie assists organizations by analyzing and designing compensation programs including
job analysis, external market evaluation and compensation database management.
EXPERIENCE
Stephanie has more than twenty years of experience with both employee and executive pay
programs for a variety of public and private sector organizations. She also has extensive
experience in the design and administration of custom salary surveys.
CLIENTS
Coinstar
Casey Family Programs
Chapter 13 Trustees
City of Bellingham
Energy Northwest
University of Washington
City of Seattle
Columbia County
Snohomish County PUD
Santee Cooper
City of Tacoma
Sacred Heart Medical Center
MILLIMAN
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DAVE EVANS
Senior Compensation Analyst
Dave Evans is a senior compensation analyst in Milliman's Seattle office. Dave provides
market pricing, database analysis and job analysis to organizations during their review of their
compensation programs.
EXPERIENCE
Dave has over four years of compensation experience in the public and private sectors,
including experience in the design and administration of custom salary surveys and job
analysis.
CLIENTS
BDO Seidman City of Federal Way
TriMet City of Seattle
Totem Ocean Trailer Express City Utilities of Springfield
EDUCATION & ACHIEVEMENTS
BA degree in Psychology, University of Nebraska-Lincoln
MS degree in Organizational Psychology, Montana State University
MILLIMAN
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JONATHAN TSUN
Compensation Analyst
Jonathan Tsun is a compensation analyst in the strategic rewards practice in Milliman's
Seattle office. Jonathan assists organizations by analyzing compensation programs including
job analysis, external market pricing and database analysis.
EXPERIENCE
Jonathan joined Milliman after several years in the service industry. He has experience in
data analysis and management.
CLIENTS
South Carolina Education Lottery
SNOPAC
YMCA of Greater Seattle
EDUCATION & ACHIEVEMENTS
Matanuska Telephone Association
City of Federal Way
American Seafoods Group
Bachelor's degree in Business Administration with a concentration in financial analysis from
the University of Washington
MILLIMAN
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LARRY DANIELS
Principal, Survey Manager
Larry Daniels is a compensation consultant and survey manager in the Seattle office of
Milliman.
EXPERIENCE
Larry has more than twenty years of experience in compensation consulting and survey
management. This experience includes the development and implementation of salary
administration programs, the conduct of compensation surveys, and the review and
development of human resource policies and procedures. He has performed assignments for
clients in a variety of industries, including banking, manufacturing, health care, government,
education, and utilities.
Larry has served as project manager for the annual Puget Sound Regional Salary Survey
since its inception in 1981. Similarly, he leads the annual efforts to plan, conduct, and publish
other major surveys, including the Northwest Management & Professional Salary Survey and
the Northwest Executive Compensation Survey. Larry also assists individual clients in
conducting custom salary and benefit surveys, and in the establishment of competitive and
cost-effective salary and benefit structures.
Particular technical specialties include the implementation of point-factor and market-based
approaches to job evaluation for public and private sector clients. He is skilled in
communicating with employee groups to solicit employee input and to enhance their
understanding and acceptance of the organization's compensation program.
CLIENTS
Nordstrom K2 Corporation
Clark Public Utilities City of Seattle
EDUCATION & ACHIEVEMENTS
BA, magna cum laude, from UCLA
MBA from University of Oregon
Current member WorldatWork and Northwest Compensation Forum
MILLIMAN
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